Mexico and Brazil have agreed to save a decade-old auto trade pact by limiting auto exports for three years, as sought by Brazil, Mexico’s economy ministry said on Thursday.
Brazil asked to renegotiate the deal, known as the ACE-55, after the value of Mexican car exports increased significantly — aided by a rise in the Brazilian real and weakening of the Mexican peso.
“A temporary incremental regime was agreed on for duty-free exports of light vehicles for each country, for a three-year period,” the economy ministry statement said.
The Brazilian government had sought a total annual export quota of US$1.4 billion from Mexico for three years to correct a deficit in mutual trade that favored Mexico by US$1.7 billion.
Under the deal, the sum of exports will be US$1.45 billion for the first year before increasing in the second and third years to US$1.56 billion and US$1.64 billion respectively, the statement said.
Brazil’s government has increased tariffs on imported autos from other countries, but could not do so on products from Mexico due to the 2002 pact.
Auto exports from Mexico to Brazil rose almost 40 percent last year.
Mexico is Latin America’s top vehicle exporter, with a total production of 2.5 million units last year, including 2.1 million sold outside the country.
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